A Company Has Income Before Tax of $200,000

question 30

Essay

A company has income before tax of $200,000. The company also has a temporary difference of $80,000 relating to capital cost allowance (CCA)in excess of depreciation expense recorded for the year. There are no other permanent or temporary differences. The income tax rate is 40%.
Required:
Compute the amount of taxes payable and income tax expense.

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Definitions:

Cash Dividends

Profits paid out to shareholders by a corporation from its earnings in the form of cash.

Financing Activities

Transactions and events that affect the equity and long-term liabilities of a company, including issuing shares, repaying loans, and paying dividends.

Cash Dividends

Payments made by a corporation to its shareholders from its profits or reserves, distributed in the form of cash.

Financing Activities

Transactions and business events that involve raising funds to support company operations, investing activities, and shareholder returns, typically through borrowing or issuing equity.